The owner of ABC Co. suspects abnormalities in the processing of accounts receivable. This is ABC...
The owner of ABC Co. suspects abnormalities in the processing of accounts receivable. This is ABC Co.'s first year of business, and the following information is available.
Collections from customers, $203,000
Merchandise purchased, $325,000
Ending merchandise inventory, $95,000
Goods are marked to sell at 50% above cost.
Accounts receivable balance per the ledger, $87,000
Which of the following statements is correct?
Select one:
a. The owner is correct; accounts receivable is understated in the ledger by $27,000.
b. $87,000 is the appropriate balance; the ledger is correct.
c. The owner is correct; accounts receivable is understated in the ledger by $55,000.
d. The owner is correct; accounts receivable is understated in the ledger by $142,000.
Homework Answers
Cost of goods sold = (325000 - 95000) = $230,000
Sale 230000 *1.50= $345,000
Actual accounts receivable balance = Sale - Collections from customers
= 345000 - 203000 = $142000
accounts receivable is understated in the ledger by = 142000 - 87000 = $55000
option c. is correct answer.
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Your accounts receivable clerk, Mitra Adams, to whom you pay a
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decide to test the accuracy of the accounts receivable balance of
$128,740 as shown in the ledger.
The following information is available for your first year
in business.
(1)
Collections from customers
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(2)
Merchandise purchased
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Ending merchandise inventory
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